Elasticity of Supply

Economics Revision Article Series

Elasticity refers to percentage change in one variable with respect to percentage change in another variable.

Authors

• Narayana Rao

Published

Creative Commons Attribution 3.0 License

Version 5

Last edited: 18 Oct 2011

Exported: 26 Nov 2011

Original URL: http://knol.google.com/k/-/-/2utb2lsm2k7a/225

Definition

 

Similar to elasticity of demand, elasticity of supply can also be defined.

 

Supply elasticiy =

 

Percentage rise in quantity supplied/Percentage change in price

 

Elasticity refers to percentage change in one variable with respect to percentage change in another variable.

The supply elasticity helps the Government to decide incentives it wants to offer to industries to increase supply.

 

 

For Further Reference

 

Explorations in Economic Supply, Part I

http://ecedweb.unomaha.edu/DEM_SUP/supply.htm

Part II

http://ecedweb.unomaha.edu/DEM_SUP/supply2.htm

Part III

http://ecedweb.unomaha.edu/DEM_SUP/supply3.htm